TOTAL NIGERIA PLC 9M'19 Earnings - High Leverage Precipitates Losses In Q3
TOTAL recently released its 9M’19 scorecard, reporting a 2% y/y climbdown in turnover to ₦221.8 billion (Vetiva estimate: ₦222.7 billion). A major highlight in TOTAL’s Q3 performance is the drift in profitability to negative terrain, as the firm posted a loss after tax of ₦205 million for 9M’19—a reflection of the impact of high finance charges (9M’19: ₦6.1 billion, 9M’18: ₦3.0 billion) on earnings.
Fuels segment posts flattish Q3 turnover
Q3 fuel sales came in flat y/y at ₦57.8 billion (Vetiva estimate: ₦58.3 billion), as a 12% y/y decline in aviation fuel revenue was offset by a 2% y/y uptick in sales of other fuels. Looking ahead, we believe the recent border closure will further reinforce the government’s drive to curb the smuggling of petroleum products into neighbouring countries.
High finance charges lead to losses in Q3
TOTAL’s performance remains dragged by huge finance costs, a consequence of the firm’s persisting exposure to high levels of leverage. With the firm’s bank overdrafts climbing to ₦53.9 billion (9M’18: ₦35.7 billion) in the quarter, finance costs surged 65% y/y to ₦2.2 billion (Vetiva estimate: ₦1.9 billion) in Q3.
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